tv Nightly Business Report PBS September 5, 2014 7:00pm-7:31pm EDT
. this is nightly business report with tyler mathisen and susie gharib. >> jobs down. the economy adds jobs in august but nearly 100,000 fewer than forecast. what the numbers mean for the economy, the fed and investors like you. treasure trove, alibaba sets the price range for the initial public offering opening the door for what could be the biggest ipo in history. >> top picks, stocks that pay you to own them. three blue chip names to buy now, that and more tonight on "nightly business report" for friday, september 5th. good evening, everyone. disappointing news about the job marp c market but investors shrugged it off and stocks ended higher. american businesses added only
142,000 jobs in august, now that's not a bad number, but it's much lower than expected and july's numbers were revised lower by 30,000. despite that, the nation's unemployment rate kicked a notch lower to 6.1% because so many americans gave up looking for a job. what happened? where did the jobs go? and after six months of gains and a string of encouraging data about the economy, do these numbers even make sense? hampton pearson has more. >> reporter: the retail sector are a net loss of 8,000 jobs led the way in the unexpected august slow down in hiring. the sector's weakness was cost by 17,000 workers temporary out of work due to the strike at the new england grocery store chain market basket. the overall weak number broke a sixth-month streak of employers adding over 200,000 jobs leaving
economists and government officials saying the numbers don't make sense when compared to recent trends with strong auto sales and gdp growth and consumer confidence and jobless claims falling. >> i don't believe it. i don't believe this data. it's not consistent with anything, anything. it's not consistent with ism. it's not consistent with adp. it's not consistent with unemployment insurance claims. >> when you look at the trend data, the last three months is over 200,000, the last year we're averaging very solid gains. >> the unemployment rate fell to 6.1% but that's because some 2 million people stopped looking for work last month and were not counted as unemployed, however, at 4.7 million, job openings are at a 13-year high another reason leading economists are skeptical about the data. >> job openings, very dramatically. now the number of open positions are back to where they were
prerecession. >> reporter: august job growth leaders include professional and business service adding 47,000 jobs this month and a total of 639,000 in the last year and rebound and vacation travel continues to boost new jobs in the hospitality sector. hotels and restaurants hired another 22,000 jobs, nearly 290,000 in the last year. >> we are now coming off 52 straight months of job growth. this past month showed 22,000 new jobs created and that's driven because of greater leisure travel, both domestically and internationally here to the u.s. >> reporter: today slow down in job growth may temporarily stall the debate over wage growth and the timing of the fed's next move on interest rates. for "nightly business report", i'm hampton pearson in
washington. 33 and counting, that is the number of times the s&p 500 had closed at a record high this year and today, despite that soggy job's news was another of those days. stocks rebounded from early losses, finished at session highs and this marks the fifth consecutive week of gains for the major market barometers. at the close, the dow was up 67, the nasdaq ahead by 20 and s&p added ten to reach that all-time closing high of 2007. for the week, all three of those indexes had marginal gains. joining us now to talk more about today 's jobs report and what it says about the health of the u.s. economy, steven whiting, global chief strategist with city private bank and kevin cummings. steven and kevin, thank you for joining us. steven, let me begin with you. you heard our report. what is the message of this employment news today? is it a fluke?
is the number of fluke or something more serious going on? do you think? >> most economies can't measure what employment will do on a month to month basis. these are extrapolated and you heavily manipulate them with seasonal adjustment. what is meaningful from this report is that, you know, back in 2008, we had 155 million people available to look for work or working. today we have 156 million. the unemployment rate fell from 10 to 6% as you heard earlier on in the program, unfilled job openings are the highest level since 2001, yet the u.s. labor force really hasn't budged. we have been tightening labor markets at rather moderate or slow gdp growth rates and that's suggesting future limits. we should not be expecting a big acceleration in employment growth for what is strong now going on a fourth year.
>> so kevin, let me pick up on something steven just mentioned, unfilled job openings at a high level. is it because we don't have enough skilled workers to fill the jobs? what gives here? >> the labor market, i take a little more of an optimistic outlook for the u.s. economy in that we're creating over 200,000 jobs a month. so far this year, you averaged 215,000 jobs that will continue to push the unemployment rate lower. admittedly, some of the drop in the unemployment rate reflects those dropping out of the labor force, but as the labor market picked up momentum this year, you're likely to see a little pickup in the number of people coming back into the labor force, so that you really probably will stabilize going forward from the labor force precipitation rate. the job growth we're getting will put more than enough downward pressure where you start to see a pickup in wages and that's one of the missing ingredients here that you touched on in your earlier spot,
and i think that's going to likely help the consumer and get gdp growth going more towards 3% going forward and back away from the 2% that we've had so far in the recovery. >> i'd like to pick up on the 3% growth. steven, let me ask you this. a lot of people think 3% now, maybe it will go higher. there will be a real pickup. the economy will take off and with it the stock market. is that how you see it? is this a new speed limit for the economy? >> i think we can have a 3% gdp growth in the coming year. we can do better than the first half average with the negative first quarter and 1%, but the idea that there is a recovery that's still ahead of us, that we haven't already been quite deep into, i think is a mistake. i think if you look at labor markets, the pace of declines, the trajectory of declines has been suggesting the economy has been growing about trend for sometime. so you don't, for example,
shouldn't expect employment to go from a 200,000 monthly pace or a little above that as we've seen over the past 12 months to a 300,000 number or some tremendous gain from there. we're already there. this is what a recoverly looks like. >> so, kevin, what do you think the normal rate of growth for the u.s. economy will be over the next decade or so? >> well, there's been a lot of discussion here and it's an active debate and there is a lot of variables that are difficult to forecast to make that assumption. i can sympathize with the idea it's come down some. i think a lot of the doomsayers, i think that's a bit backward looking. if you think about it more recently, you've had a massive fiscal tightening, that's not something that will happen going forward. >> is it closer to 3% or 2%? >> i would argue closer to %, yeah. >> steven -- >> and the other part was the deleveraging and the consumer is
deleveraged and we're back at a spot if you look at debt to income ratios in a healthy position, and higher savings rate. >> i'm sorry i cut you off. i want to get one last comment from steven before we wrap this up. you worry me with your outlook. as an investor, i'm wondering, what do i do with my money and how do i protect myself? are you telling your clients? >> i would be aware. right now we're well positioned again. there is no obstacles to growth within the coming year. we're over weight equities in moderately under weight fixed income. we're under weight credit. i think the allocation, we shouldn't assume this can stay here, that three years from now there may be meaningful limits to the u.s. recovery. if you think about what slowed the labor force, there is nothing from the demographic side that is already effectively slowed the labor force. i've been an of tptimist since
2009. >> thank you so much, gentlemen. steven whiting and kevin comings, thanks so much. overall job growth may have slowed last month but hiring in the maritime industry is speeding up and there is a rush to bring in new blood into the profession as it faces a potentially crippling shortage of skilled workers. marry thompson takes a look at where the jobs are from the port of los angeles and long beach. >> reporter: global trade is on the rise, good news for a 1 122-year-old family owned firm operating 200 vessels around the world. >> we will hire between 5 and 600 workers over the next five years. >> reporter: the challenge for the ceo finding those workers, especially officers. why? competition for their talent is global. many officers are nearing
retirement age and new regulations mean more training and time on the water for their replacements. just how big is the problem? well, a 2010 report by the international maritime organization forecasting the industry should be short to 46,000 ship's officers in a few years. >> reporter: they recruit newly minted officers and works with a union. the union's monitor retirements and make sure there are enough hands ready to work on deck. >> we have two people for every job every time. in a realistic world, what would you like to have, t2.5 people. >> reporter: he is in a training program. for three months he's schooled in the basics until the industry, fire fighting, life saving and navigation. this will land him where he can start to assent the ship's ladder. >> i want my ownership by 50.
that's my goal. >> reporter: for 12 years, steve is a captain leaving architectural engineering. >> there is a ton of different opportunities there. you can do construction towing, you can do ship work. you can do ship assist work. you can work on an oil rig. i mean, there is a bunch of different opportunities. yes, it's like a doctor. there is a million different kinds of doctors you can be. >> reporter: you can do it earning a descent wage. he could earn up to $40,000 his first year and a captain earns six figures. >> i've done military, retail, it, but this is my last go at it and i think this will be where i'll fit in the most. >> reporter: a career that is fit for the long haul. for "nightly business report", i'm mary thompson at the port of los angeles long beach. european union officials agreed to a new round of
sanctions against russia. they are expected to be imposed early next week. this common sense after world leads wrapped up a summit today where russia was on the docket. hadley gamble has more from wails. >> reporter: coming together finding a consensus and decided on going ahead with this rapid response force much talked about. they are calling it a spear head force, component and it's going to be based in poland and going to reassure the eastern european states the nato alliance is there for them in terms of security. >> increase nato air patrol wills continue. rotations of additional forces throughout eastern europe for training and exercises will continue. patrols in the black sea will continue. and all 28 nato nations agree to contribute to all of these 7a"l
measures. >> reporter: now also, they have been discussing what to do about the threat from islamic terrorists. islamic states, major concern for many of these european countries, as well as the united states. they formed a major coalition of the willing essentially, they say they want to tackle the islamic state but yet to hear a clear plan or strategy in terms of how to do that and essentially the u.s. secretary of state set a red line for all of these countries will be putting boots on the ground. nobody wants to do that. homework for the europeans in terms of defense spending. a lot of buzz around here about are they going to pony up, begin to fund their own security? so a ten-year period where the europeans will be able to meet that 2% military spending in terms of gdp is a non-binding resolution. we'll wait and see if they meet that benchmark. for "nightly business report", i'm hadley gamble in wails. >> reporter: three blue chip buys that pay you hand somely to hold them.
new details on what is expected to be wall street's biggest initial stock offering ever. shares after alibaba will begin trading on the new york stock and change two weeks from today, september 19th. 320 million shares available, priced from 60 to $66 a piece raising more than $21 billion in that ipo. that tops visa's record $17 billion ipo back in 2008 and that could value alibaba at 16 3 billion dollars. it's way more than what the wallet disney company is worth.
yahoo could net as much as $8 billion by selling a portion of what it owns in the ipo. yahoo shares rose 1% on today's news. gilliad is close to making a generic version of $84,000 drug. the drug cures about 90% of patients with hepatitis c who take it, but it's high cost stirred controversy. the company is said to be close to a licensing deal that would allow a lower cost version of the drug to be sold in about 80 developing countries. but not here in the u.s. that sent shares down almost 1.5% to $105.36. they say loose lips sink ships. tesla shares took a hit of elon musk was maybe a little too honest about his company's stock. >> do think people sometimes get carried away with our stock, you
know, honestly. and, you know, i think our stock price is kind of high right now, to be totally honest. let me put it this way, if you care about the long-term tesla, i think the stock is a good price. if you look at the short term, it's less clear. >> you see the guys around him squirming when he did that? the location of the company's $5 billion battery factory we told you about. those comments help send the stock down 3% to $277.39. shares of dollar general off after family dollar rejected its sweetened $9 billion bit siting anti trust concerns and instead the chain is sticking with a)2w $8.5 billion offer. dollar tree ended the day higher. michael kors' largest shareholder is selling the entire stake and went lower.
two of the board members will sell the combined 5.7% stake and step down from the board. shares off 4.5% to $76.39. >> a down day for another retailer, gap. it reported a 2% drop in august sales missing forecasts. it's old navy unit posted a strong increase in sales but that didn't reassure investors. shares fell 4% to $44.65. price line declined after the rating was cut on the stock. the firm downgraded the site to equal weight and cut the price target by $100 based on concerns about competition from google. shares fell 2% to $1,195. the market monitor is a classic shareholder. portfolio manager for the franklin income fund, up 9.5% so far this year. ed, welcome. good to have you with us.
you like companies that return capitol and the first pick has a 4.7% dividend. tell me about it. >> royal dutch is one of our top holdings and really it's about expectations that have existed for that company and management turnover. the new ceo been on the job about six months and actually made nice progress already, really focussing on capital ol' location and improving free cash flow, importantly, we think a lot of that will benefit shareholders in the form of dividends going forward. >> you like, ed, intel which has a big dividend. tell us more why investors should pay $35 a share for intel? >> yeah, you know, intel is an interesting example. it's partially a company that's been revalued and rerated by the market. it started out of favor. i think people were really concerned about the overall outlook for the pc market and the companies really delivered,
shown better performance, pcs and data centers. over 80% revenue and importantly, we've seen some signs that important growth markets like mobile and tablets, the company is starting to perform better there, as well. incredibly strong balance sheet and a company focused on delivering that to shareholders. even though we've seen nice performance, we think it can continue to perform well, trades at a discount to the overall market and really has a nice profile. >> your final pick pays 4.5%. it's verizon. >> yeah, you know, this is on the other end of the spectrum. when we look at verizon, we see not just that attractive dividend yield but a company that just this week also increased its dividend. i think the eighth consecutive year where they increase the annual dividend and a company that we think is really in a tremendous position in the
wireless business in the u.s. they have shown continued strength there, not just in revenue growth but also maint n maintaining a very high margin and that's really driving profitability and that will continue to benefit verizon. >> thank you for being with us tonight. have a great weekend. appreciate your perspectives. >> good to be with you. >> ed perks, a portfolio manager for the franklin income fund. coming up next, you've heard all about them and probably seen them buzzing overhead, drones. we'll enter dusz yintroduce you flying high and making money from them. that's next. on this job's friday a story about a form erma rein in
southern california who is making and selling drones for a living. an faa ban put commercial drone use in a mirky gray area requiring special permission until rules are formalized, which might not happen until next year but making and selling them, well, that's another story and it is our latest bright ide idea. >> reporter: it sounds like a swarm of bees or your neighbor's leaf blower, but it's not. it''s a drone, and the noise it makes is music to patrick smith's ears. smith liked to fly radio controlled planes when he was a kid. after a stint in the marine corps. he tried selling vacuums among other things. on a whim, he mixed photography with his passion for flying machines in 2007. >> one day i took a go pro and put it on an airplane. when i landed and reviewed the footage, i was blown away like this is aerial photography
without having to hire or pay for a real airplane. >> reporter: the military has been using drones for years and you've heard about the big guns google and amazon looking to use them for same day deliveries, but smith has been building and selling unmanned coptors since 2009 providing views of surfers, glaciers, city scrapes, motor cross and he's even shot music videos. to say smith's business arial media pros has taken off isn't just a cliche, it's an understatement. >> we're projecting 2017 to break 100 million in sales and there is no reason why this couldn't be a billion dollars company. >> smith's video was anything but perfect in the beginning. >> it was always shaky and getting vibrations and that was a constant plague. your tilt and your roll. >> reporter: to get past the turbulence, smith developed a stabilization system. now he can peak above the tree tops and turn on an approach to
get in close. smith's high-end coptors can cost 20 to $30,000 a piece, small for producers paying 5 to $10,000 an hour to rent helicopters and airports. >> now you can adjust and keep the camera at the height place. >> reporter: a professional photographer trusts him to carry his gear. >> we have 50 or $60,000 floating in the air. this would allow us to provide services that would normally require a big helicopter. >> reporter: lower-end helicopters for $700 are attracting a wider range. >> some people use them to check their duck blinds in texas, search and rescue, people are doing like lots of real estate. >> reporter: the company's growth has smith hiring other military vets like brandon in less than six months, he's gone
from technician to sales manager. >> in the military, i mean, you have all sorts of different people coming from abackgrounds and you learn how to deal with people and get goodwo work ethi >> reporter: while google and amazon and others wait for the government to regulate unmanned commercial flights. smith is actually looking forward to it. >> we don't want to have 20,000 of these up in the air. so i think the guidelines coming down will be helpful. >> reporter: plenty of potential investors reached out to smith but he's not looking for financial help right now because he sees nothing but opportunity on the horizon. >> if we can branch out into the government sector and supply the helicopters to them, we can propel faster and get an edge on helping serve the community. >> smith is bringing in more than $700,000 a month right now, his client list is nasa, google
updating maps and elon musk. studios are shooting features and several films he worked on are due out. it was interesting how much cheaper the use of the drones is for a hollywood film maker is to use a helicopter. i remember seeing some videos of the napa earthquake shot of the damage, shot by drones. it was the best view you could see. >> the coolest things. i haven't seen them but i think we'll see more of them. >> that will do it for "nightly business report" for tonight and this week. thanks for watching, everybody. i'm tyler mathisen. >> i'm susie gharib. have a great weekend, everyone. tyler and i will see you back here monday night.
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